D.C. feels economic brunt of sequestration

WASHINGTON – If automatic federal spending cuts — known as sequestration — were going to pinch, perhaps it’s no surprise that the federal city is saying “ouch!”

“We are already feeling the impact and feeling it probably more so than others,” says D.C. Mayor Vincent Gray.

The mayor charges that the federal sequester, which began in January, has raised the unemployment rate and slowed economic growth in the city.

“The loss of federal jobs and funding is a direct result of sequestration and has flattened the city’s job growth,” Gray says.

Director of Employment Services Lisa Mallory estimates that the city added 3,400 jobs in the private sector this year, while losing 7,000 federal government jobs. The city’s unemployment rate, which reached a high of 10.3 percent in August 2011, fell to 8.4 percent in January, but has edged up to 8.6 percent in July.

The mayor says he believes that the city’s unemployment rate would be as low as 8 percent if not for the sequester.

“Sequestration is obviously resulting in a slowdown in the growth of the District’s economy,” Gray says.

Chief Financial Officer Fitzroy Lee forecasts the city will receive $30 million less in federal funding in 2014. Lee estimates that the reduced federal payment will have the effect of sucking $60 million from the city’s economy next year.

Budget cutters in Congress have said all along that their goal is to reduce federal spending and it would stand to reason that the District, which relies heavily on federal dollars, would be among those suffering the consequences.

But the mayor says if the law isn’t changed, the reduced funding will hurt city residents next year including needy families seeking federal housing, special education students and students who rely on free and reduced-price lunches.

“We’re calling on the Congress to end sequestration and balance the budget responsibly and certainly not on the backs of those who are in the District of Columbia,” Gray says.